Case T‑241/13

Hellenic Republic

v

European Commission

‛EAGGF — Guarantee Section — EAGGF and EAFRD — Expenditure excluded from financing — Beef and veal — Sheepmeat and goatmeat — Tobacco — Article 69 of Regulation (EC) No 1782/2003 — Article 31(2) of Regulation (EC) No 1290/2005 — Article 23(1) of Regulation (EC) No 796/2004’

Summary — Judgment of the General Court (Sixth Chamber), 16 December 2015

1. Agriculture — Common agricultural policy — EAGGF, EAGF and EAFRD financing — Clearance of accounts — Purpose

   (Council Regulation No 1290/2005, Art. 31)

2. Agriculture — Common agricultural policy — Direct support schemes — Common rules — Single payment scheme — Regional and optional implementation — Additional payment granted for particular types of agriculture and quality production — Determination of withholding rates — Discretion of the Member States — Limits — Obligation on Member States to inform operators of eligibility conditions — Scope

   (Council Regulation No 1782/2003, Art. 69; Commission Regulation No 795/2004, Art. 48(6))

3. Agriculture — Common agricultural policy — EAGGF, EAGF and EAFRD financing — Grant of aid and premiums — Obligation on the Member States to organise an effective system of administrative and on-site inspections — Unreliable controls — Disallowance by the Fund

   (Council Regulation No 1782/2003, Art. 69; Commission Regulation No 795/2004, Art. 48)

4. Agriculture — Common agricultural policy — EAGGF, EAGF and EAFRD financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Challenge by the Member State concerned — Burden of proof — Shared by the Commission and the Member State

   (Council Regulation No 1290/2005, Art. 31)

5. Agriculture — Common agricultural policy — EAGGF, EAGF and EAFRD financing — Clearance of accounts — Disallowance of expenses arising from irregularities in applying EU rules — Assessment of the losses incurred by the EAGGF — No obligation on the Commission to establish the existence of a genuine loss by the Fund

   (Council Regulation No 1290/2005, Art. 31(2))

6. Acts of the institutions — Statement of reasons — Obligation — Scope — Decision on the clearance of accounts in respect of expenditure financed by EAGGF, EAGF and EAFRD — Summary report relating to the decision showing contradictions having the effect of preventing the addressees from knowing the reasoning for the decision — Infringement of the duty to give reasons — Annulment of the decision

   (Art. 296 TFEU; Council Regulations No 1258/1999, Art. 7(4), and No 1290/2005, Art. 31; Commission Decision 2013/123)

7. Actions for annulment — Competence of the EU judicature — Interpretation of the reasoning of an administrative measure — Limits

   (Arts 263 TFEU and 264 TFEU)

1.  See the text of the decision.

   (see para. 22)

2.  The additional payment provided for in Article 69 of Regulation No 1782/2003 establishing common rules for direct support schemes under the CAP and establishing certain support schemes for farmers is designed, first, to encourage farmers to comply with the requirements to improve the quality of their products and to protect the environment, by way of recompense for their adapting to the new CAP requirements, and secondly, to mitigate the effects which the transition from the direct payments scheme to the single payment scheme entails in any event for some product sectors. In that context, Article 69 of Regulation No 1782/2003 grants all Member States a certain discretion for the purpose of making additional payments under the CAP reform. However, the authorisation granted to the Member States is strictly limited in scope and subject to a series of conditions of both a procedural and substantive nature.

   The obligation laid down by Article 48(6) of Regulation No 795/2004 laying down detailed rules for the implementation of the single payment scheme provided for in Regulation No 1782/2003 enables the Commission to be informed of the eligibility conditions decided upon by the Member States. It also serves to ensure that the operators concerned are aware of the conditions for qualifying for the additional payment provided for in Article 69 of Regulation No 1782/2003 before the beginning of the claim year. In that regard, the incentive function performed by the additional payment can be effective only if the eligibility conditions applicable to a claim year are known to the farmers concerned before the start of that year and are not retrospectively modified.

   (see paras 30, 31, 33)

3.  See the text of the decision.

   (see para. 35)

4.  See the text of the decision.

   (see para. 36)

5.  In the context of the assessment by the Commission of the amounts to be disallowed from EU financing after irregularities are found in the expenditure made by a Member State, Article 31(2) of Regulation No 1290/2005, on the financing of the Common Agricultural Policy, does not introduce a condition making each correction subject to the demonstration of actual damage suffered by the Fund.

   (see para. 44)

6.  When reviewing the statement of reasons for a decision disallowing from EU financing certain expenditure by Member States under the various EU structural funds, account must be taken of a summary report which accompanied the decision, since that report constitutes an essential document for understanding the reasoning of the contested decision, being the basis on which that decision was adopted. The Court must annul the said decision where there is a contradiction in reasoning as between the summary report and other relevant documents from the administrative procedure concerning the correction at issue, combined with other imprecisions or contradictions in the reasoning supporting that report, such contradiction making it impossible for the Member State to know the real reasoning on which the contested decision is based from the point of view of the financial correction imposed. A contradiction in the statement of the reasons on which a decision is based constitutes a breach of the obligation laid down in the second paragraph of Article 296 TFEU such as to affect the validity of the measure in question if it is established that, as a result of that contradiction, the addressee of the measure is not in a position to ascertain, wholly or in part, the real reasons for the decision and, as a result, the operative part of the decision is, wholly or in part, devoid of any legal justification.

   (see paras 51, 56, 63, 64)

7.  See the text of the decision.

   (see para. 57)